The Australian retail group, Coles Myer, has confirmed reports that it is negotiating to acquire the liquor retailing chain, Theo's Liquor, in a deal which could be worth more than A$300m. Theo's Liquor is an independent company which operates 75 stores in Queensland and New South Wales.

However, regulators are thought to be concerned about the potential deal as the acquisition would give Coles Myer and its prime competitor, Woolworths, a total share of the Australian liquor market in the region of 40%.

Allen Fels, chairman of the Australian Competition and Consumer Commission, said the proposed deal raises supply concerns. "The smaller suppliers tend to get concerned about reduced competition in buying," he said. "We hear plenty, typically from small competitors of the big chains that they can't get the same prices when they are buying and so they suffer competitively."